The FMT also upheld the DFSA's decision to prohibit all three individuals and concluded they are not fit and proper to perform any function in connection with financial services in or from the DIFC
The Financial Markets Tribunal (FMT), a specialist independent tribunal, has affirmed a decision by the Dubai Financial Services Authority (DFSA) to take enforcement action against two firms and three individuals for unauthorised financial services activities and making misleading and deceptive statements.
The firms are Al Masah Capital Limited, a Cayman Islands registered company now in liquidation and Al Masah Capital Management Limited, a DFSA Authorised firm, also now in liquidation. The three individuals are Shailesh Dash, Nrupaditya Singhdeo and Don Lim Jung Chiat, DFSA said in a statement.
The FMT imposed financial penalties on all five:
$3,000,000 (AED 11,010,000) on Al Masah Capital (AMC);
$1,500,000 (AED 5,505,000) on Al Masah Capital Management Limited (AMCML);
$225,000 (AED 825,750) on Dash;
$175,000 (AED 642,250) on Singhdeo
$150,000 (AED 550,500) on Lim.
In May, DFSA announced that it has imposed $4.5 million in fines against the two entities at the Dubai International Financial Centre (DIFC) for breaches of the authority’s legislation between August 2010 and June 2016. According to the DFSA, Al Masah Capital Limited, carried on unauthorized financial services in the DIFC, such as managing a collective investment fund and arranging deals in investments.
The FMT sanctions are the same as those imposed by the DFSA, except for the fine for Singhdeo, which the FMT increased by $25,000. This was because the FMT saw Singhdeo’s responsibility for the misconduct as somewhat greater than that reflected in the fine imposed by the DFSA, the statement said.
The FMT also upheld the DFSA’s decision to prohibit all three individuals and concluded they are not fit and proper to perform any function in connection with financial services in or from the DIFC. The FMT also ordered them to pay the DFSA’s costs of the proceedings.
The case involved complicated structures in which investors bought shares in companies that then bought shares in other businesses. However, the FMT agreed with the DFSA that the arrangements were investments in funds. The FMT took the view that these were managed by AMC, the Cayman registered entity, from within the DIFC when it was not authorised to do so.
Bryan Stirewalt, Chief Executive of the DFSA, said: "Firms and the individuals in charge have a responsibility to ensure that all financial services activities in or from the DIFC are appropriately authorised and carried out properly. The DFSA is particularly concerned by attempts to use legal structures to avoid regulation when the substance of the activity is a financial service conducted in or from the DIFC."
The FMT found that the two companies and three individuals had concealed from potential investors the payment of placement fees to AMC. In particular, annual reports and audited financial statements had been altered to remove the full extent of fees that had been paid.
According to the statement from DFSA, the FMT noted that the misrepresentation of fees was intentional and deceptive, and the altered documents were used as marketing materials to persuade potential investors to invest, and so any misleading statement therein would be a breach of the prohibition on misleading and deceptive conduct.
The FMT found that the two companies had committed breaches and that the three individuals were knowingly involved in the contraventions.
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